Total Interest Paid. Lloyd and Jean are considering purchasing a home requiring

ID: 2758185 • Letter: T

Question

Total Interest Paid. Lloyd and Jean are considering purchasing a home requiring a $75,000 mortgage. The payment on a 30-year mortgage r for this amount is $498.97. The payment for a 15-year maturity is $674.12. What is the difference in the total interest paid between the two different maturities? 5. Tax Savings. This month you made a mortgage payment of $700, of which $600 was an interest payment and $100 a payment of the loan principal. You are in the 25% mar.; - al tax bracket. What is the tax savings as a result of this payment? 6. Annual Costs of Renting. Teresa rents her apartment for $650 per month, utilities not included. When she moved in, she paid a $700 security deposit using money from her savings account that was paying 3% interest. Her renter's insurance costs her $60 per year. What are Teresa's total annual costs of renting?

Explanation / Answer

Calculation of Difference in total interest paid:

For 30 Year Mortgage

For 15 Year Mortgage

Monthly Payment (A)

$ 498.97

$ 674.12

Number of Payments (B)

360

180

(30 Years *12)

(15 Years *12)

Total Amount paid = (C) = A*B =

$ 179,629.20

$ 121,341.60

Principal Amount (D)

75000

Total Interest Paid = C-D =

$ 104,629.20

$ 46,341.60

Difference in total interest paid = 104629.20 - 46341.60=

$58,287.60